Many of us have spent our lives going to work each day to earn enough to pay the bills and borrowing from the banks to get those little extras like a house or a car. Yes, modern life has encouraged us to borrow a bit too much and many of us have built up large credit card debts and personal loans.
Generally speaking we have done so in what we thought was a realistic belief that we would be able to repay those debts and though we may have failed to give a great deal of thought to the future cost of those debts we certainly didn’t intend to dig ourselves into a financial hole.
We are human and we think emotionally. Very few of us work through a spreadsheet of income and expenses to establish exactly where all our money comes from or goes to, though maybe more of us should. We are not professional money managers. It’s a sideline for us, just another part of life and all it’s complications.
You would epect things to be very different in the financial industry where people have been paid huge amounts of money to know what is what, when it comes to money. Yet, every week we hear more tales of financial carelessness causing problems for many of the huge financial corporations and all this has led to governments around the world having to bail out companies, pump money into the system. Today, we are expecting the chancellor to offer us yet more borrowed money in a financial stimulus package which, it is hoped, will encourage us all to spend more.
If we all did our financial spreadsheets we would probably decide we should spend less, not more. The system that has driven business over the last few decades seems to be broken and all these measures seem to be just trying to prop up a broken system.
We are constantly told that the problems arose in the US and travelled around the globe but this is not the fault of a few poor people who thought they could improve their lives with these mortgages that they couldn’t afford. They didn’t have spreadsheets and they just did what financial advisers told them they could do.
Borrowed money was the problem, we are told. Poor people who were either stupid, careless or devious, but these people didn’t have spreadsheets. They did what they were told was the best thing for them. Invest in a house, secure your financial future. What they didn’t know was that they were mere pawns in a game being played by, supposedly, financial experts who did have spreadsheets and were supposed to understand what was going on.
News that the US Treasury is to inject billions of dollars into Citigroup to prevent it’s collapse may help it’s 200 million account holders but it does more to support the system that currently exists. How much longer can governments go on pumping yet more borrowed money in to save this slowly sinking, ship?
I discovered this article The End by Michael Lewis who previously wrote a book Liars Poker in 1989 about his experiences on Wall Street and how he thought it was doomed. It’s quite a long article but it makes for chilling reading. To think that these companies and these supposed financial experts were gambling with other people’s money to such an extent and with such little real understanding of what they were dealing with is staggering.
Some bankers have started to say sorry both here and in the USA. I guess that is something similar to someone saying sorry after they accidently shot someone when the gun they were playing with went off. If you play with dangerous weapons you have a responsibility to use them wisely. It’s a shame and a tragedy that the people playing with the financial markets didn’t seem to even realise what they were playing with and how serious it could all become.